Some of the policies adopted by the WW2 japanese army , seem to be along the lines of the ancient samurai code of Bushido. Policies such as extreme loyalty to the emperor , honor unto death and suicidal warfare.

My question is about the missing connection/link between these two era of japanese history.

How did modernization of Japan in the Early twentieth century affect the Samurai , and why was there such a strong influence of the samurai on the japanese army who followed similiar methods of warfare ?

Were there any officers in the Japanese army ,who were descendants of the samurai ?
If there were such officers/soldiers , did they wear any insignia on their uniforms , to mark their samurai legacy ?

Were these officers/soldiers allowed to wield any other weapons or the samurai katana , apart from the standard issue firearms ?

2 Answers
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The Meiji Restoration that took place between 1868 - 1912 saw many of the traditional rights and privileges of the Samurai class drastically changed or removed entirely.

In 1869 all Samurai were renamed as Shizoku and the Samurai class ceased to exist.

In 1869 members of the samurai class and quasi-samurai were legally categorized as either shizoku or sotsuzoku. In 1872 sotsuzoku were categorized as shizoku or as seimin (common people). The word shizoku, therefore, denoted a former samurai, and 3 million Japanese fell into this category in 1872.

Subsequently, Shizoku saw many of their traditional rights stripped away. The right to carry swords was abolished, conscription in the Imperial Japanese Army was implemented and the traditional stipends payed to Samurai were converted to be government bonds.

The book quoted above goes on to say that these changes combined to undermine the traditionally privileged position of the Samurai. Despite this, the Shizoku began to dominate the social, political and economic life of Meiji Japan. However, the importance of the class was further eroded when the class of an individual was no longer officially recorded from 1914, making the term an indicator of Samurai heritage more than it was a privileged position.

This was a fractious time, and the changes being made caused several rebellions stemming from the Shizoku class, as well as peasant classes. One example of such a rebellion is the Satsuma Rebellion that took place in 1877.

In 1871 the first units of the Imperial Japanese Army were formed.

In early 1871, when a force of about 10,000 men drawn from the feudal armies was organized, Yamagata was promoted to vice minister of military affairs. This Imperial Force was later renamed the Imperial Guard (Konoe), and Yamagata became its commander.

The encyclopedia only states that the men were drawn from feudal armies so we can assume that the majority of the men were once either Samurai or Ashigaru (Professional Foot soldiers employed by Samurai).

Evidence of the of importance of the Shizoku in it's formation can be drawn from the fact that the commander of the newly formed Imperial Japanese Army, Yamagata Aritomo was a member of a Samurai family from the Choshu domain and that the initial commander of the Imperial Guard, Saigo Takamori (the eventual leader of the Satsuma Rebellion), who was a Samurai from the Satsuma domain.

Further more, there are many other examples of members of the Shizuko class holding high rank in World War 2. One of the most well known examples of this is Tadamichi Kuribayashi, the commander of Japanese forces during the Battle of Iwo Jima. Kuribayashi was born in 1891 to a minor Samurai family in the Hanishina District, Nagano prefecture.

The Imperial Japanese Army did not issue any insignia or special weapons to officers drawn from the Shizoku, but the influence of the Samurai culture can still be seen. When specifically looking at the IJA in WW2, a sword known as the Shin Gunto was issued to NCOs and Officers of the IJA between 1935 and 1945. While different swords were issued to NCOs and Officers of different ranks there was no special variant issued to Shizoku. (The Japanese Army 1931-45 (2): 1942-45, Philip S. Jowett)

The Shin Gunto swords were close enough in aesthetics to appear to be traditional Katana, but were however of inferior construction as they were not made using the traditional materials and methods but were instead mass produced using western steel. (The Connoisseur's Book of Japanese Swords, Kōkan Nagayama)

I think you are exaggerating the ideological transformation brought by Meiji Restoration. The main emphasis was economic modernization, not social equity.

How did modernization of Japan in the Early twentieth century affect the Samurai and why was there such a strong influence of the samurai on the japanese army who followed similiar methods of warfare ?

While feudal classes were officially abolished, there was no prosecution of samurai, so they went on to do what they were good at - police and army.
"Ex"-samurai became and remained the backbone of the IJA.

Were there any officers in the Japanese army ,who were descendants of the samurai ? If there were such officers/soldiers , did they wear any insignia on their uniforms , to mark their samurai legacy ?

There were no official insignia, but many kept their family katanas with them.

Were these officers/soldiers allowed to wield any other weapons or the samurai katana , apart from the standard issue firearms ?

Like in any army, officers enjoyed certain privileges, like, e.g., an ability to chose their sidearms.